MMW-43 -- Apple's iTunes Music Store Continues to Impress

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J@pan Inc Magazine Presents:
M U S I C M E D I A W A T C H
Commentary on the week's music technology news
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Issue No. 43
Tuesday, May 20, 2003
Tokyo

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CONTENTS

++ FEATURE: Apple's iTunes Music Store Continues to Impress

++ NOTEWORTHY NEWS:
- Roxio Makes Bid for Pressplay
- Forrester Report: European Digital Music Market to Reach
1.3 Billion Euros by 2007
- RIAA Apologizes For Erroneous Notifications

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++ FEATURE: Apple's iTunes Music Store Continues to Impress

For the past few weeks, the top news about music downloading services
has focused not on lawsuits, but on a new service that, for once,
seems to satisfy everyone -- users, artists, even the record industry.
By any measure, the launch of Apple's iTunes music download service
has been a phenomenal success. The sales figures are astounding:
275,000 songs sold in the first day; 2 million in the first 16 days,
all at 99 cents per track. Apple has already announced a Windows
version and a European version of its service, both by the end of the
year. How is it that Apple, with a mere 3-percent share of the desktop
computer market, was able to succeed where all others have (so far)
floundered?

While many reasons for Apple's strong showing have been put forth
recently (mostly by Steve Jobs), a combination of three factors stand
out in particular: the simplicity of the service, the freedom granted
to users, and the timing of the launch.

Simplicity
The first thing one notices about the iTunes service is that it is
remarkably elegant and simple to use, especially compared to other
Windows-based services such as MusicNet and pressplay. There are flat
fees of 99 cents to download a song and $9.99 for an album. No
subscriptions are required. The service has over 200,000 songs, which
can be searched by album, artist, genre and title. Users can hear a
30-second preview of any song and click on a "Buy it!" button to
download the track. Even for novices, the system is easy to understand
and use.

Freedom
From the standpoint of users, one of the main drawbacks of some of the
other music download services is the high amount of restrictions
placed on what users can do with the music they download. In most
cases, it is difficult to copy these songs or burn them to CDs. And
with many services, once the subscription expires, the songs disappear
from the user's computer. Apple has managed to attract users by
allowing them to keep the songs indefinitely, copy them to any number
of iPod players and burn any number of copies onto CDs. The company is
also able to draw on its brand image, which has a strong reputation
for individual freedom and being pro-consumer rather than
pro-corporation.

Timing
Finally, the timing for launching iTunes could not have been better.
Despite its considerable focus on litigation and intimidation, the
record industry has known for some time now that it would have to come
up with a competitive alternative to the free download services. For
two years, the free services have been blamed for declining CD sales,
while the music industry's attempts and paid services have met with a
lukewarm response at best. Meanwhile, analysts have been reporting
recently that users would indeed pay for downloaded music if the price
were reasonable, the service simple, and the restrictions minimal.
Apple saw that the time was right and released the first service to
combine all of these critical requirements.

Getting It Right
While praise for iTunes has so far outweighed the criticism, there
have been reports that the sound quality could be improved for some
tracks. Also, some artists have voiced concern that being able to
download songs on a per-track basis could lead to the end of the album
as an art form. And of course, many users feel that the
99-cent-per-song price is still a bit high.

Still, the overwhelming majority of reports from both users and
analysts have been highly positive, conveying a feeling of relief that
someone has finally figured out how to make a successful, legal music
download service. And the record companies, after spending massive
amounts of money to fight music download services in the courts, now
stand to win big if the success of iTunes and similar services
continues. Just as the film industry now makes millions from the video
rentals it fought so hard to prevent, the music industry is now poised
to reap huge benefits from a business model that it first tried to
eliminate, then had to learn from a computer manufacturer.

-- Steve Myers

Link:
"Ready to Rock," about KDDI's new music download service, from 02/03
http://www.japaninc.net/article.php?articleID=1014

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++ NOTEWORTHY NEWS

** Roxio Makes Bid for Pressplay

In Brief: CNET reported this week that Roxio, the company that bought
Napster last year after its bankruptcy, is now getting close to buying
pressplay, one of the two major post-Napster online music services.
Pressplay, which is owned by Universal and Sony, has reportedly lost
$30 million so far.

Source:
http://news.com.com/2100-1027-1007516.html

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** Forrester Report: European Digital Music Market to Reach
1.3 Billion Euros by 2007

In Brief: A recent study by Forrester Research reports that digital
music in Europe will grow to an estimated 1.3-billion-euro market by
2007 and will account for 13 percent of all music sales. According to
the study, the growth of the digital music download market will be
facilitated by broadband adoption in Europe, and the bulk of the
revenue from digital music will come from individual downloads rather
than subscriptions.

Source:
http://www.europemedia.net/shownews.asp?ArticleID=16355

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** RIAA Apologizes For Erroneous Notifications

In Brief: Last week, the Recording Industry Association of America
(RIAA) sent out apologies and retractions of about two dozen
notifications that were sent in error to various organizations warning
them of copyright infringement violations. The RIAA explained that a
temporary worker released the notifications without confirming their
validity. Among those receiving the erroneous notices were Penn State
University and Speakeasy.

Source:
http://news.com.com/2100-1083-1003664.html

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STAFF
Written by: Steve Myers (steve@thetamusic.com)
Steve Myers is president and chief enthusiast of Theta Music
Technologies, which specializes in the development of music-related
software applications.

Edited by J@pan Inc editors: (editors@japaninc.com)

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